Protecting Business Ideas With An NDA (Non disclosure agreement)

January 19, 2014

Most people who start a business are private about it in at least some capacity. Even people who are relatively open about their business still do not want to disclose absolutely everything about what they are doing, and want at least some degree of privacy. In this post I will explain how you can protect your business ideas with legal mechanisms such as NDAs (Non-disclosure agreements) and a few common sense techniques.

Protecting Business Ideas With A Non-Disclosure Agreement (NDA)

The most common legal tool to protect business ideas is a document called the NDA which stands for non-disclosure agreement. The document can be either one-sided or two-sided. What that means is that it can either protect the person who discloses the information, or both parties. The parties can be individuals, businesses, or nonprofits.

There are two core issues that make the NDA less effective than ideal. The first problem with the NDA is that you actually have to go to court to make the NDA count. And that is an expensive and risky proposition to anyone. The second problem with the NDA is that it puts a barrier between the person who is asking for the NDA to be signed and the person who will potentially be signing the NDA. So instead of spending the valuable meeting time on discussing the business, the two parties are stuck discussing and signing the NDA.

Work With People Whom You Can Trust To Protect Your Business Ideas

One simple and common sense thing you can do to protect your business is to work with people whom you can trust and who have reputations for having integrity and being good to work with. That will help you not only protect your business ideas, but to build a better-functioning team that is made up of quality players.

Trust is a very underrated aspect when it comes to building a team and creating a positive and constructive work environment. In fact, keeping an open mind and being able to trust the people around you is one of the themes in our business psychology article.

Should You Get A Patent To Protect Your Business Idea?

Sometimes people ask whether they should get a patent to protect a business idea. The answer is a simple no because patents do not protect business ideas. Patents protect actual inventions. And for something to be an invention, it must almost always exist in the world. Additionally, when you do create your prototype, getting a patent for it is quite expensive and time consuming. And patents are rarely needed. There is a place for them, but it is much more rare than people tend to think. If you feel that you might need a patent, you should research the topic, and contact an attorney. But be careful that the idea you are trying to protect actually needs a patent. Most ideas do not need a patent.

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Additionally, I wrote a book about going from business ideas to starting a business. A part of that book deals with how to protect your business ideas. Here is a page where you can learn more about the business idea book.